[MEXICO CITY] Mexico warned on Thursday that China's weakening of the yuan could trigger a global currency war, as the peso hit new lows against the dollar.
The remarks by Finance Minister Luis Videgaray came after the People's Bank of China weakened the yuan currency to the lowest level since March 2011.
"As the yuan moves, worries begin around the world that we could be entering a cycle of competitive devaluations, which is frankly a perverse phenomenon because if all countries end up devaluating, nobody will makes itself more competitive," Mr Videgaray said.
The peso reached a new historic low against the US currency as it surpassed 18 pesos to the dollar during trading.
"The exchange rate in Mexico is moving alongside a global phenomenon, it's not a phenomenon specific to our economy," he said at a news conference, adding that the peso has also been hit by the fall in global oil prices.
Mexico's stock market, meanwhile, fell 2.47 per cent as it closed with a loss for the ninth consecutive day amid global concerns over the Chinese economy.